LPL Financial (LPLA) AI Stock Analysis

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LPL Financial

(NASDAQ:LPLA)

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Neutral 63 (OpenAI - 5.2)

Rating:63Neutral

Price Target:

$391.00

▲(3.90% Upside)

The score is driven mainly by financial performance that is strong on revenue growth and improving leverage but constrained by declining net margins and negative TTM operating/free cash flow. The earnings call was a meaningful positive (record assets/EPS and constructive 2026 guidance) but is balanced by integration, recruiting, and yield-pressure risks. Technicals are broadly neutral, while valuation (high P/E and low yield) is a notable headwind.

Positive Factors

Diversified, recurring revenue model

LPL earns recurring advisory fees based on AUM plus commissions and technology fees, creating diversified cash flow streams. This mix supports durable revenue stability across cycles, reduces reliance on single-product sales, and underpins long-term advisor platform stickiness.

Scale and asset-gathering momentum

Record $2.3T assets and strong organic net new assets (7% annualized) signal durable scale benefits: larger AUM base drives recurring fee revenue, improves bargaining power with product providers, and enhances network effects that attract and retain advisors over multiple quarters.

Successful acquisition integration and synergies

High retention and an indicated run-rate EBITDA contribution from the Commonwealth deal point to meaningful, lasting operating leverage. Successful integration expands advisor count and AUM while delivering cost synergies that sustainably improve margins once fully realized.

Negative Factors

Negative operating and free cash flow

Persistent negative operating and free cash flow undermines the firm's ability to self-fund growth, pay down debt, or return capital. Over months this can force higher reliance on external funding, increase interest costs, and constrain strategic investments and acquisitions.

Compressing net margins and falling ROE

Material declines in net margin and ROE indicate deteriorating profitability and lower capital efficiency. If persistent, this reduces internal capital generation, limits reinvestment capacity, and weakens returns to shareholders despite top-line growth.

Rising interest expense and revolver reliance

Increasing interest expense from revolver usage raises fixed costs and sensitivity to rate moves, eroding net margins. Over the medium term this can constrain flexibility for M&A or buybacks and may force more conservative capital allocation until cash conversion improves.

LPL Financial (LPLA) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$29.17B

Dividend Yield0.32%

Average Volume (3M)528.97K

Price to Earnings (P/E)33.4

Beta (1Y)1.24

Revenue Growth35.19%

EPS Growth-18.62%

CountryUS

Employees9,118

SectorFinancial

Sector Strength70

IndustryFinancial - Capital Markets

Share Statistics

EPS (TTM)5.23

Shares Outstanding80,037,620

10 Day Avg. Volume643,740

30 Day Avg. Volume528,965

Financial Highlights & Ratios

PEG Ratio11.03

Price to Book (P/B)8.32

Price to Sales (P/S)1.97

P/FCF Ratio-85.61

Enterprise Value/Market Cap1.22

Enterprise Value/Revenue2.28

Enterprise Value/Gross Profit9.45

Enterprise Value/Ebitda17.33

Forecast

1Y Price Target

$448.10

Price Target Upside19.07% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering11

EPS Forecast (FY)N/A

Revenue Forecast (FY)N/A

LPL Financial Business Overview & Revenue Model

Company DescriptionLPL Financial Holdings Inc., together with its subsidiaries, provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at financial institutions in the United States. Its brokerage offerings include variable and fixed annuities, mutual funds, equities, retirement and education savings plans, fixed income, and insurance, as well as alternative investments, such as non-traded real estate investment trusts and auction rate notes. The company also provides advisory platforms that provide access to mutual funds, exchange-traded funds, stocks, bonds, certain option strategies, unit investment trusts, and institutional money managers and no-load multi-manager variable annuities. In addition, it offers money market programs; and retirement solutions for commission-and fee-based services that allow advisors to provide brokerage services, consultation, and advice to retirement plan sponsors. Further, the company provides other services comprising tools and services that enable advisors to maintain and grow their practices; trust, investment management oversight, and custodial services to trusts for estates and families, as well as insurance brokerage general agency services; and technology products, such as proposal generation, investment analytics, and portfolio modeling. The company was formerly known as LPL Investment Holdings Inc. and changed its name to LPL Financial Holdings Inc. in June 2012. LPL Financial Holdings Inc. was founded in 1989 and is based in San Diego, California.

How the Company Makes MoneyLPL Financial generates revenue through multiple key streams, primarily by charging fees for asset management and advisory services, as well as commissions from brokerage transactions. The company earns a significant portion of its revenue from advisory fees based on assets under management (AUM), which are recurring in nature and provide a stable income. Additionally, LPL collects commissions from the sale of various financial products, including mutual funds, ETFs, and insurance products. The firm also benefits from technology and transaction-based fees charged to advisors for using its proprietary platforms and services. LPL has established partnerships with various financial product providers, which enhances its offerings and contributes to its revenue through distribution agreements. Overall, the combination of fees from advisory services, commissions from transactions, and technology service revenue constitutes the primary drivers of LPL Financial's earnings.

LPL Financial Key Performance Indicators (KPIs)

Any

Revenue by Segment

Revenue by Segment
Highlights income from different business lines, revealing which areas drive growth and profitability, and indicating strategic focus.

Chart InsightsLPL Financial's revenue segments show robust growth, particularly in Advisory and Commission, reflecting strategic expansion and successful integration of Commonwealth. The earnings call highlights record-breaking assets and a 25% increase in adjusted EPS, underscoring strong operational performance. However, challenges like high interest expenses and sluggish adviser movement could impact future growth. The company's focus on cost efficiency and asset retention, with a 98% rate, positions it well for continued success despite these headwinds.

Data provided by:

The Fly

LPL Financial Earnings Call Summary

Earnings Call Date:Jan 29, 2026

(Q4-2025)

% Change Since: |

Next Earnings Date:Apr 23, 2026

Earnings Call Sentiment Positive

The call presented a predominantly positive picture: record adjusted EPS, record assets under management ($2.4 trillion), strong full-year organic net new assets ($147 billion, ~8% growth), high retention (97%) and clear progress on strategic M&A (Commonwealth, Atria, Prudential) and operating efficiency. Key near-term risks highlighted include Commonwealth retention noise (adviser sign-ups currently in the low-80% of assets versus a 90% target), elevated transition assistance and TA levels, short-term recruiting cadence and timing for pipeline pull-through, modest yield pressure from recent rate cuts, and higher 2026 G&A driven by Commonwealth integration. On balance, the company’s material operational and financial wins and clear path to realize Commonwealth synergies outweigh the near-term integration and recruiting timing challenges.

Q4-2025 Updates

Positive Updates

Record Earnings per Share

Q4 adjusted EPS of $5.23, up 23% year-over-year, and record adjusted EPS for the fiscal year of $20.09, driven by organic growth and expense discipline.

Record Asset Levels and Strong Organic Asset Growth

Total advisory and brokerage assets reached a record $2.4 trillion (up 2% sequentially from Q3). Full-year organic net new assets were $147 billion (approximately 8% growth), with Q4 organic net new assets of $23 billion (about a 4% annualized growth rate).

Robust Recruiting and Retention Metrics

Q4 recruited assets were $14 billion (annual total $104 billion). Overall asset retention was 97% for Q4 and over the last 12 months. In Q4, the firm added ~ $13 billion in traditional markets and ~ $1 billion from expanded affiliation models.

Strategic M&A Progress and Scale Expansion

Completed onboarding/integration of Atria Wealth Solutions and signed/closed acquisition of Commonwealth Financial Network (largest deal in LPL history, adding ~3,000 advisers). Expect Commonwealth to contribute roughly $425 million of run-rate EBITDA once fully integrated.

Improved Profitability and Margins

Q4 gross profit of $1.542 billion (up $62 million sequentially) and adjusted pretax margin of ~36%, reflecting operating leverage from organic growth and cost discipline.

Client Cash and Fee Revenue Strength

Client cash balances ended Q4 at $61 billion (up $5 billion sequentially). Client cash revenue was $456 million (up $14 million sequentially). Service and fee revenue was $181 million in Q4 (up $6 million sequentially) with an expected ~ $25 million sequential increase in Q1 due to fee changes (providing an ongoing ~$35 million quarterly benefit / ~$140 million annually).

Operating Efficiency and Controlled G&A

Core G&A for the full year was $1.852 billion, below the low end of prior guidance. Prior to Prudential, Atria and Commonwealth, core G&A grew ~4% in 2025—the lowest level of growth in several years—demonstrating progress on efficiency initiatives.

Employee and Brand Momentum

Launched a national marketing campaign and reported highest employee engagement scores in nearly a decade, supporting adviser acquisition and retention efforts.

Capital Position and Leverage Management

Leverage ratio was 1.95x at the end of Q4 (near midpoint of target range), corporate cash of $470 million, and management signaling potential to revisit share repurchases as leverage sits at midpoint and Commonwealth integration progresses.

Negative Updates

Commonwealth Retention Uncertainty and Adviser Departures

Press suggested retention running below the 90% asset retention target; management reports advisers representing low-80% of assets have signed to stay so far (management continues to expect ~90% asset retention once onboarding completes). Some adviser headcount departures have been publicized and remain an area of focus and risk.

Recruiting Pipeline Timing and Near-Term Pull-Through

While pipelines are near record levels, they are weighted toward early/mid-stages. Recruiter focus on Commonwealth retention slowed organic recruiting in the near term, and pull-through timing could take months (3–12 months depending on adviser type), delaying a return to prior recruiting run rates.

Market Rate Cuts Impacting Yield

ICA yield was 341 bps in Q4, down 10 bps sequentially due to October and December rate cuts. Management expects the full-quarter impact of the Q4 rate cuts to lower ICA yield by another ~10 bps in Q1, pressuring cash-related revenue.

Elevated TA and Transition-Related Costs

TA (transition assistance) levels spiked after the Commonwealth announcement and remain elevated in the marketplace. TA loan amortization was $133 million in Q4, up $28 million sequentially (driven by Commonwealth-related transition assistance and recruiting), with expected further modest increases in Q1.

Near-Term Expense Increase from Commonwealth Integration

2026 core G&A guidance includes ~$380–$390 million of full-year incremental expenses related to Commonwealth, lifting overall 2026 core G&A to $2.155–$2.210 billion and implying underlying core G&A growth (pre-Commonwealth) of 4.5%–7%—an acceleration vs. 2025's ~4% growth.

Corporate Cash Decline and Short-Term Liquidity

Corporate cash declined to $470 million (down $99 million sequentially), which combined with integration and acquisition spend may constrain near-term capital return timing despite leverage at midpoint of target range.

Competitive Pressure on Recruiting Economics

Competition in the recruiting market remains aggressive, with elevated TA offers and other upfront economics in the marketplace; management remains disciplined but notes the competitive environment could pressure recruiting metrics and economics in the near term.

Company Guidance

The company guided to continued operating progress in 2026 with specific near-term and full-year metrics: Q1 core G&A is expected to be $540M–$560M and full‑year core G&A is guided to $1.775B–$1.820B before Commonwealth (Commonwealth adds ~$380M–$390M, bringing total 2026 core G&A to $2.155B–$2.210B); Q1 TA loan amortization is expected to rise ~ $5M (Q4 TA amortization was $133M) and Q1 depreciation & amortization to rise ~$5M (Q4 D&A $105M); promotional expense was $76M in Q4 and is expected to be roughly flat in Q1. Financial and business outlook drivers include total AUM at a record $2.4T, Q4 organic net new assets $23B (~4% annualized) and FY organic NNA $147B (~8%), recruited assets $14B in Q4 ($104B for the year), 97% asset retention (Q4 and LTM), client cash $61B (up $5B Q/Q) with client cash revenue $456M in Q4, ICA yield 341 bps (down 10 bps Q/Q with a ~10 bps full‑quarter headwind expected in Q1) and ICA fixed‑rate mix ~55% (targeting low‑ to mid‑60% as balances normalize). They reiterated Commonwealth onboarding on track with an expected run‑rate EBITDA of ~$425M when integrated, Q4 adjusted EPS was $5.23 (record; $20.09 for the year) with adjusted pretax margin ~36% and Q4 gross profit $1.542B; corporate cash was $470M and leverage ~1.95x (near midpoint), and management said the fee change will add ~ $35M of service & fee revenue per quarter (≈ $140M annualized) with Q1 service & fee revenue up ~ $25M sequentially.

LPL Financial Financial Statement Overview

Summary

Solid top-line momentum (TTM revenue up 10.22%) and improved gross margin (43.37%) are positives, and leverage improved (debt-to-equity 1.53 vs 1.96). Offsetting these, net margin declined (5.35% vs 8.55% in 2024) and operating/free cash flow were negative in TTM, raising profitability and liquidity concerns.

Income Statement

Positive

LPL Financial has demonstrated strong revenue growth with a 10.22% increase in TTM, indicating robust business expansion. However, the net profit margin has decreased to 5.35% in TTM from 8.55% in 2024, suggesting pressure on profitability. The gross profit margin improved significantly to 43.37% in TTM, reflecting better cost management. EBIT and EBITDA margins have remained relatively stable, indicating consistent operational efficiency.

Balance Sheet

Positive

The company's debt-to-equity ratio has improved to 1.53 in TTM from 1.96 in 2024, showing a reduction in leverage. However, the return on equity has decreased to 20.61% in TTM from 36.12% in 2024, indicating a decline in profitability relative to shareholder equity. The equity ratio remains stable, suggesting a balanced capital structure.

Cash Flow

Neutral

LPL Financial's cash flow position is concerning, with negative operating and free cash flows in TTM, indicating potential liquidity challenges. The free cash flow to net income ratio is positive at 1.41, suggesting that despite negative cash flows, the company is generating cash relative to its net income. However, the operating cash flow to net income ratio is negative, highlighting inefficiencies in converting income into cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	15.57B	12.39B	10.05B	8.60B	7.72B	5.87B
Gross Profit	3.76B	3.37B	3.05B	2.37B	1.71B	1.49B
EBITDA	2.05B	2.11B	1.99B	1.53B	936.43M	908.93M
Net Income	833.05M	1.06B	1.07B	845.70M	459.87M	472.64M
Balance Sheet
Total Assets	18.03B	13.32B	10.39B	9.48B	7.99B	6.60B
Cash, Cash Equivalents and Short-Term Investments	1.54B	1.01B	541.76M	884.28M	514.92M	818.36M
Total Debt	7.71B	5.75B	3.96B	2.95B	3.05B	2.59B
Total Liabilities	12.99B	10.39B	8.31B	7.31B	6.32B	5.28B
Stockholders Equity	5.04B	2.93B	2.08B	2.17B	1.67B	1.31B
Cash Flow
Free Cash Flow	-1.94B	-284.94M	109.33M	1.64B	237.15M	634.41M
Operating Cash Flow	-1.38B	277.59M	512.61M	1.95B	453.13M	789.94M
Investing Cash Flow	-3.17B	-1.59B	-860.19M	-376.40M	-458.64M	-187.50M
Financing Cash Flow	4.40B	1.42B	-208.53M	-504.27M	278.84M	-275.19M

LPL Financial Technical Analysis

Technical Analysis Sentiment

Positive

Last Price376.33

Price Trends

50DMA

365.38

Positive

100DMA

354.29

Positive

200DMA

359.00

Positive

Market Momentum

MACD

0.55

Negative

RSI

55.97

Neutral

STOCH

54.41

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LPLA, the sentiment is Positive. The current price of 376.33 is above the 20-day moving average (MA) of 367.90, above the 50-day MA of 365.38, and above the 200-day MA of 359.00, indicating a bullish trend. The MACD of 0.55 indicates Negative momentum. The RSI at 55.97 is Neutral, neither overbought nor oversold. The STOCH value of 54.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LPLA.

LPL Financial Risk Analysis

LPL Financial disclosed 32 risk factors in its most recent earnings report. LPL Financial reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

LPL Financial Peers Comparison

Overall Rating

UnderperformOutperform

Sector (68)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
IBKR	78 Outperform	$33.35B	33.73	20.41%	0.46%	11.88%	28.96%
RJF	78 Outperform	$32.75B	16.14	17.16%	1.26%	6.45%	5.85%
SCHW	77 Outperform	$184.66B	22.35	18.11%	1.07%	5.90%	66.60%
TW	73 Outperform	$24.37B	35.20	10.51%	0.45%	22.17%	40.13%
SF	72 Outperform	$12.56B	21.01	11.72%	1.43%	7.54%	2.73%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
LPLA	63 Neutral	$29.17B	33.38	20.86%	0.32%	35.19%	-18.62%

* Financial Sector Average

Performance Comparison

LPLA

LPL Financial

376.33

13.41

3.69%

IBKR

Interactive Brokers

75.27

19.69

35.44%

RJF

Raymond James Financial

167.34

3.53

2.15%

Stifel Financial

124.18

13.19

11.88%

SCHW

Charles Schwab

105.17

23.42

28.65%

Tradeweb Markets

102.83

-24.25

-19.08%

LPL Financial Corporate Events

Business Operations and StrategyExecutive/Board Changes

LPL Financial appoints Somesh Khanna to board

Positive

Jan 8, 2026

On January 5, 2026, LPL Financial Holdings Inc. elected Somesh Khanna to its board of directors as an independent director, a move announced publicly on January 8, 2026. Khanna, currently a senior advisor at McKinsey & Company and executive co-chair of technology services firm Apexon, brings more than 30 years of consulting and financial services leadership, including senior roles in global banking, digital strategy and organizational transformation, as well as prior CEO experience in a digital trade receivables securitization business. He also serves on the boards of KeyCorp and Persado. LPL’s board chair, Jim Putnam, highlighted Khanna’s deep expertise in digital transformation, artificial intelligence and data-driven strategic planning as directly aligned with LPL’s growth trajectory and ongoing efforts to innovate for financial advisors, institutions and their clients, suggesting his appointment could strengthen the firm’s strategic positioning in technology-enabled wealth management. Khanna’s addition to the board, combined with his advanced management and engineering education, underscores LPL’s focus on leveraging digital and AI capabilities to support advisors and enhance productivity across its large, advisor-centric platform.

The most recent analyst rating on (LPLA) stock is a Buy with a $444.00 price target. To see the full list of analyst forecasts on LPL Financial stock, see the LPLA Stock Forecast page.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jan 30, 2026